COVID-19 Update: Germany to Give Working Parents State-Funded Compensation Claim During Closure of Childcare and Schools

For working parents who are unable to fulfil their working duties due to the closure of kindergarten, day care centre and/or school as a result of the pandemic, the German parliament has passed a new law in a fast-track procedure. The essential aspect under this legislative change is that under certain conditions, affected parents are granted a state-funded compensation claim under the German Infection Protection Act (Infektionsschutzgesetz – IfSchG), which is legally distinct from the contractual remuneration claim.

Companies with employees in Germany may now be confronted with various questions on the new regulation. The following is an overview of the most frequently asked questions and their answers.

1. What are the requirements for a compensation claim under the new law?

In order to be entitled to the state-funded compensation claim, the employee must meet all the following requirements:

Temporary closure of or prohibition of access childcare facilities or schools by the competent authority to prevent the spread of infections or infectious diseases under the Infection Protection Act;

employedparents entitled to custody or foster parents of childrenunder12 years of age or disabled and dependent on assistance must now look after their children themselves;

lack of other reasonablecarefacilities for the child;

According to the meaning and purpose of the regulation, there is no reasonable possibility of care if it is offered by a person who is to be protected by the measures (keyword: risk group). Reasonable in this sense would be care by partners, family members or friends who are not exposed to a particular risk.

this results in a loss of earnings on the parent’s part; and

The loss of earnings must be due solely to the closure/prohibition of access and must not be based on other legal or factual circumstances. Furthermore, certain measures which would prevent the loss of earnings but at the same time allow the employees to take of their children have priority (e.g. reduction of overtime or working from their home office).

closure of the institution/school would not have occurred anyway due to (school) holidays.

The reasoning of the law does not provide an answer to the question of how school holidays relate to the maximum compensation period of 6 weeks. In our opinion, it would be in line with the regulation’s sense and purpose that school holidays merely lead to a suspension of the claim.

2. What are the legal consequences for the employment relationship?

The fulfilment of the above-mentioned requirements most likely gives the employee a right to refuse performance, which, if asserted, leads to the legal impossibility of performing work. Under the principles of the German Civil Code (Bürgerliches Gesetzbuch – BGB), this generally leads to the employee also losing his remuneration claim. Only the claim for state-funded compensation under the new law then remains.

3. When does the new regulation apply?

The regulation already came into force on March 30, 2020 for a limited period until December 31, 2020.

4. What is the amount of compensation?

The compensation generally amounts to 67% of the loss of earnings incurred, however, is capped. For a full month, a maximum entitlement of EUR 2,016 will be granted.

5. For what period is the compensation claim to be paid?

The state-funded compensation will be granted for a maximum of six weeks.

6. Who is obliged to pay the compensation?

In principle, the employee’s claim for compensation is directed against the German state in the form of the competent authority. However, the new regulation orders employers to make advance payments to their employees for the duration of the employment relationship. The employer will then only be reimbursed the amounts paid out at its application to the competent authority.

Employers are well advised to exercise the greatest possible care when calculating and paying out the amounts. It is to be assumed that the competent authority, for its part, will carry out investigations into the amount of compensation, so that any inconsistencies would initially be at the expense of the employer.

7. How do employers get the money paid in advance back from the competent authority?

Under the Infection Protection Act, the competent authority will be determined by the state government. It is to be assumed that corresponding application forms will then also be made available on the respective websites of the competent authorities.

It is strongly recommended to submit the application within three months of the temporary closure of/prohibition of access to childcare facilities/schools, as the legal situation under the new regulation is not clear in this regard.

8. What can an employer do if liquidity problems can lead to bottlenecks in advance payment of compensation?

The new law provides that the employer may, at its request, demand an advance from the competent authority in the estimated amount of the contribution to be reimbursed.

9. What can an employer do if there is doubt that the employee has no other reasonable childcare option available?

Under the new regulation, employers can only request their employees to show that they have no reasonable childcare available during this period.

The regulation does not provide for any further details, so that corresponding contractual arrangements are advisable here, such as the explicit agreement of a disclosure duty. Should the employee’s statements turn out to be incorrect, such documentation will lay the grounds for taking respective measures under employment law.

10. What is the relationship between the right to compensation and short-time work allowance?

The receipt of short-time work allowance excludes a claim for compensation under the new regulation. This is justified by the fact that parents who do not have to perform any work due to their employer’s implementation of short-time work can look after their children themselves during this period.

For more information on state-founded short-time work allowance, check our blog post.

11. Until now, employers had to continue paying the employees’ remuneration for a limited period of time – will this change as a result of the new regulation?

It can be assumed that by creating the new compensation claim, the situation of employed parents unable to work due to school and daycare closures shall be clarified conclusively. Thus, employers will probably no longer be obliged to continue paying remuneration for a period of time that was often disputed in individual cases. This is particularly welcome for reasons of legal certainty.

Further FAQs on employment-related aspects of the coronavirus pandemic for employers in Germany can be found here.

Please feel free to reach out to our Employment Team in Germany or your usual contact at Orrick to find out more or if you need any help with applying for the reimbursement.